Securities Compliance Branch

Registration of investment advisers in Hawaii is a two-step process. All applicants must file on the IARD system. Once a filing has been made via the IARD, notification will be made to the state. An examiner will be assigned to review the application. Additional documentation must be sent to the Securities Compliance Branch for review. Applicants will be notified in writing of any deficiencies in the application. When an application is approved the IARD status of the applicant will be updated.

Step 1 – File on the IARD SystemAll investment advisers filing for registration in Hawaii, are required to use the Investment Adviser Registration Depository (IARD). IARD is an electronic filing system developed and operated by the Financial Industry Regulatory Authority (FINRA) for states and the Securities and Exchange Commission for registration purposes.

All investment advisers must pay the Hawaii filing fee and submit their ADV, Part 1 and ADV, Part 2 on the IARD.

More information can be found on the IARD website.

Step 2 – Submit completed documents to the Securities Compliance BranchThe links below will provide information on the documentation that must be completed and sent to the Securities Compliance Branch for review.

Documents may be emailed to the examiner assigned to your application via our general email mailbox at [email protected].

Investment Advisers with its primary place of business in Hawaii

Investment Advisers with its primary place of business outside of Hawaii

Minimum net worth – Hawaii investment advisers (HAR §16-39-433)
Investment advisers with a place of business in Hawaii must, at all times, maintain a minimum net worth in the amounts shown.  If the investment adviser’s net worth drops below the minimum amounts shown below, the investment advisers must notify the commissioner by the close of business on the next business day.

No custody or discretionary authority = $5,000
Direct fee deduction = $5,000
Advisers to pooled investment vehicles = $5,000
Discretionary authority, no custody = $10,000
Full custody = $35,000

Minimum net worth – Out-of-state investment advisers (HAR §16-39-433)
Investment advisers with a place of business in another state are not required to comply with Hawaii’s minimum net worth requirement as long as the applicant is registered in the state where it maintains its principal place of business and is in compliance with that state’s net capital or net worth requirements, if any.

Disclosure statements (HAR §16-39-439)
Investment advisers must furnish each advisory client and prospective client with a written disclosure statement that complies with the provisions of the Investment Advisers Act, 17 CFR §275.204-3.

Privacy Policy
Under the Gramm-Leach-Bliley Act (GLBA), investment advisers are required to adopt written policies for handling confidential personal information and the proper distribution of those written policies.  More information regarding GLBA can be found in NASAA’s Privacy Policy for State Advisers.

Material changes (HAR §16-39-440)
Investment advisers must promptly notify the commissioner of any material change in any information, exhibits, or schedules submitted, or circumstances disclosed in its last Form ADV by filing a correcting amendment via the IARD.

Books and records (HAR §16-39-442)
Investment advisers must make and keep true, accurate, and current books and records in compliance with the Investment Advisers Act, 17 CFR §275.204-2.  In addition, investment advisers who have custody of client funds or securities shall keep all records and evidence of compliance required under HAR §16-39-436.Before ceasing to conduct or discontinuing business as an investment adviser, the adviser must arrange for and be responsible for the maintenance and preservation of the books and records for the full remainder of the period required under 17 CFR §275.204-2, and shall notify the commissioner in writing of the exact address where the books and records will be maintained during such period.

Expiration, renewal or termination of registration (HAR §16-39-441)
All registrations automatically expire on December 31 of each year, unless terminated sooner.  All registrants are responsible for renewing the firm and its investment adviser representatives via the IARD.  If a renewal is not completed by December 31, the registration will expire, all activities of the adviser must cease, and a new application for registration must be submitted.A registration may be terminated prior to December 31 by filing an ADV-W via the IARD.  Termination of the investment adviser’s registration for any reason shall automatically terminate the registration of each registered investment adviser representative of the investment adviser.

Financial reporting (HAR §16-39-437)
Investment advisers must file an annual financial report within 90 calendar days following the end of the investment adviser’s fiscal year.  The type of financial statements required is as follows:

Hawaii investment advisers with custody or discretionary authority
Audited financial statements.

Hawaii investment advisers without custody or discretionary authority
Financial statements that are verified by a duly authorized officer and notarized.  The Investment Adviser Verification Form is available for your use.

Out-of-state investment advisers
A copy of the most recent financial report or statement, if any, that the investment adviser has filed with the state where it maintains its principal place of business.

Financial statements may be uploaded via our Securities Online Portal or emailed to our general email mailbox: [email protected].

Offer of ADV or brochure (HAR §16-39-439)
Investment advisers must furnish each advisory client and prospective client with a written disclosure statement that complies with the provisions of the Investment Advisers Act, 17 CFR §275.204-3.  Investment advisers must also deliver annually, within 120 days after the end of its fiscal year, a current brochure to its clients

Privacy Policy
Under the Gramm-Leach-Bliley Act (GLBA), investment advisers are required to adopt written policies for handling confidential personal information and the proper distribution of those written policies.  More information regarding GLBA can be found in NASAA’s Privacy Policy for State Advisers.

Selection
Selection of an investment advisory firm for examination is random.  However, we try to visit newly registered investment advisers within the first year or two of business to ensure that new investment advisers are operating in compliance with state and other applicable securities laws.

What Should I Expect?
The examination consists of a questionnaire, an interview, and conversations between the examiner and the investment advisor that will enable the examiner to obtain a clear picture of the investment adviser’s operations.  A review of the investment adviser’s books and records will also be conducted to ensure compliance with securities laws.

To begin this process, the investment adviser will be sent a questionnaire that asks basic information about the firm and the scope of the services available to their clients.  The questionnaire includes requests for documentation to be sent back for review.  After reviewing the documentation, the examiner will request additional information, including a sampling of client account information.  The adviser will likely be asked additional follow-up questions for clarity and there may be additional discussions about potential problems found during the books and records review.

An on-site visit will also be scheduled so the examiners can see where the investment adviser’s business is being conducted and the adviser and examiner can further discuss the adviser’s business operations.

What Records are Reviewed?
The department may review all records pertaining to an investment adviser’s business operations, including the following items:

1. Form ADV;
2. The Firm’s Brochure, Form ADV part II;
3. List of names and positions for all employees, and their business cards;
4. Client Contracts and new account forms;
5. Client account information & brokerage Statements;
6. Privacy Policy;
7. Cash and Check receipts and disbursement records;
8. Advertisements including web sites, pamphlets, and brochures

Additional items may be requested.  Please refer to the Investment Advisers Act, 17 CFR §275.204-2 for bookkeeping requirements.

Common Deficiencies:
Annual Financial Statements (HAR §16-39-437)
Investment advisers must file an annual financial report within 90 calendar days following the end of the investment adviser’s fiscal year.  Please check the annual requirements for investment advisers.

Out of date information on form ADV on IARD (HAR §16-39-440)
If there is a material change to the information submitted, form ADV must be updated accordingly.  Information such as number of clients and assets under management should be updated at least once a year.

How much is the registration/renewal fee?
The registration and renewal fees are $100 per year.  The fees are paid through the IARD system.

Where do I send required documents?
Documents may be submitted to our office via our general email mailbox at: [email protected], or mailed to:

State of Hawaii
Department of Commerce and Consumer Affairs
Securities Compliance Branch
335 Merchant Street, Room 205
Honolulu, HI 96813

How long does the registration process take?
The registration process typically takes several weeks but may run longer if there are any issues or omissions with the application submitted.

When are the annual financial statements due?
The financial statements are due within 90 calendar days following the end of the investment adviser’s fiscal year.

What are the continuing education requirements?
The adoption of Hawaiʻi Administrative Rules § 16-39-454.5 requires both state-registered and federal covered investment adviser representatives to complete annual continuing education courses in order to maintain their registration in Hawaiʻi. Click here for more information.

Investment Adviser Bond Form

Investment Adviser Verification Form

Investment Adviser Affidavit Form